Why I Like Where Food Comes From (Forbes.com Interview)

“What about Where Food Comes From initially caught your attention as a value investor?

Where Food Comes From checks several of my favorite investment boxes: small, founder-led, high insider ownership, zero debt, profitable, and growing. I love industries that have long runways of growth ahead of them. Where Food Comes From benefits from several major trends in food—organic, non-GMO, gluten-free, animal welfare, and more generally, consumers demanding transparency in the food chain and wanting to know where the food they eat comes from. I like large industry tailwinds because it makes business much easier. In a fast growing market, competitors are less likely to engage in price wars or other detrimental practices. This is because most participants are growing revenue, even if they’re losing market share. Growth is harder to come by in mature markets so there’s more likely to be competitive practices that are harmful to all participants.”

2 thoughts on “Why I Like Where Food Comes From (Forbes.com Interview)”

I really love their business. Obviously the biggest concern is valuation. You mentioned $100 million revenue in a mature market, but how many years away do you see this as being? If they grow revenue at 15% a year, it seems it might take 10 years or more. There would have to be an explosion in their growth rate to end up a great investment.

WFCF believes that TAM may be $200 million. How many years away would that be?

I have no idea when this market will be fully mature – not anytime soon, that’s for sure. But in my eyes that’s a good thing because their runway for growth is extremely long. I do expect their growth to be very lumpy though. I won’t be surprised if the next ten years includes years of 50% growth and years of 10% growth. My baseline assumptions get to a fair value in the ballpark of $3.00, so I don’t think the stock is expensive. Future cash flow matters, not current earnings (which are purposely depressed because of growth investments).

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This blog is for informational purposes only. Everything on this blog is the opinion of Travis Wiedower and should not be taken as investment advice. Clients of Wiedower Capital may maintain positions in securities discussed on this blog.